How Did Anaheim City Employees Negotiate Such a Good Deal?

Activists march on Anaheim City Hall in February to protest $158-million subsidy given to a hotel developer. (Photo by: Adam Elmahrek)

ByADAM ELMAHREKJuly 2, 2012 at 2:38 PM

By most accounts, June 5 was not a good day for public employees unions.

Wisconsin voters soundly defeated a labor-led effort to recall Gov. Scott Walker; voters in San Diego and San Jose approved ballot measures that curtail future pension benefits for public employees; and in Orange County, labor leader Julio Perez lost to corporate-backed Democrat Tom Daly and Republican Jose Moreno in the primary election for the Assembly seat in the mostly working-class 69th District.

But at least one public employees union did well for itself on Election Day, albeit not at the ballot box.

That night the Anaheim City Council approved a contract with its general employees union that promises, among other things, no layoffs, no outsourcing of city services, an end to furloughs and lump sum payouts totaling $2,200 to every employee who had previously taken furlough days.

That a Republican-dominated city council would agree to such a contract given the current political and budgetary climate surrounding public employee unions has not only raised eyebrows among some inside City Hall but also triggered rebukes from two council members, one a Republican who voted against the deal and one a Democrat who supported it.

Republican Mayor Tom Tait, the only member of council to vote against the contract, has criticized it as a “terrible precedent,” specifically citing the promises of no layoffs or outsourcing.

While labor leaders and the majority of City Council members defend the June 5 agreement as fair, citing the introduction of a new pension benefit program for new hires, the deal is a world away from where the two sides were earlier this year.

Only months earlier, the union that represents city employees and the newly emerged council majority — Kris Murray, Gail Eastman and Harry Sidhu — were engaged in open warfare defending the January approval of a $158-million taxpayer subsidy to a local hotelier.

The Orange County Employees Association, which represents the Anaheim Municipal Employees Association, paid for expensive mailers that called Murray, Eastman and Sidhu “The Giveaway Three.” The union also helped fill a KABC-TV town hall meeting with anti-subsidy protesters, turning the general forum into another show of anger.

And most importantly, OCEA was the main funder of a signature drive, which was being led by Democratic City Councilwoman Lorri Galloway, for a November ballot proposition that would require all future hotel subsidies to be subject to a citywide vote.

The question being asked around City Hall is how, against that backdrop, did this deal happen?

Much speculation at City Hall is now focusing on an April meeting between Nick Berardino, OCEA general manager; Carrie Nocella, Disneyland's government relations and minority business development director; and Todd Ament, Anaheim Chamber of Commerce president.

“We know that meeting was not a hello-how-are-you meeting,” said Galloway, who is now publicly questioning whether key business leaders were involved behind the scenes to help the council majority turn down the heat on a blistering union offensive in Anaheim.

“It was all about deal making,” Galloway said.

Good Deal or Unrealistic Promises?

Galloway said that after that meeting, OCEA seemingly lost all interest in the ballot initiative she is leading. But Berardino, Murray and Eastman defended the deliberations behind their labor contract. Sidhu did not return a call for comment.

Berardino acknowledged meeting with Ament and Nocella but described it as a meeting to discuss better ways to handle divisive issues like taxpayer subsidies. Any talk that a labor deal was worked out in that meeting amounts to speculation run amok, he said.

Murray and Eastman, meanwhile, insisted that the contract was a good deal for the city. They said it rewards employees who sacrificed much as the recession years drained city revenues. The deal also means pension reform, they say, because new hires will be moving to a reduced pension formula.

The rumor of a deal is “a complete falsehood, and I think it's unfortunate that people would try to spin tales to create a negative impression on something that is very positive for our employees and for our city as well,” Murray said.

“There were no external entities that impacted our collective bargaining process. … [The contract] included comprehensive pension reform and also provided some reasonable compensation for the employees. It was a genuine win-win.”

But Galloway isn't the only council member that sees it as something else.

Tait said the no-layoff promise is “a promise we may not be able to keep” and asserted that while the city's revenue assumptions have improved, the payouts are unaffordable.

“We can't make a promise that there won't be any layoffs,” Tait said. “Our budget is based upon assumptions of revenue, and if the revenue doesn't materialize, then we have no choice … or run out of money.”

Other Republicans, like Jon Fleischman, who publishes one of the state's most conservative publications, FlashReport, also question the rationale underlying the labor contract. “Certainly given everything that's going on right now, it doesn't seem very prudent for city councils to be cutting off options such as outsourcing,” Fleischman said.

A Fading Ballot Initiative

Despite the denials, speculation that a deal was forged has been fueled by evidence that OCEA ratcheted back its efforts to combat the subsidy in the month leading up to the City Council's vote on the employee contract.

The mailers, which had been sent to Anaheim residents throughout the late winter and early spring, had stopped by early May. So too had the union support of the ballot initiative. Campaign finance records show that OCEA pumped $66,000 into the initiative from April 10 to May 1, with the biggest of these contributions — $56,000 — made on April 23. But the contributions stopped after the first week of May.

And last month during the first City Council meeting after the contract was approved, the council majority pushed through another hotel subsidy deal. But this time, even though both Galloway and Tait opposed it, OCEA and other community groups that protested the original hotel subsidy in January have been quiet.

Eric Altman, the leader of Orange County Communities Organized for Responsible Development (OCCORD), shook with anger at the speaker's podium as he decried the subsidy during a Feb. 7 council meeting. But when asked about the more recent developments, he declined comment.

Altman said he and Jose Moreno, a member of the Anaheim City School District board, still have an ongoing lawsuit against the original hotel deal.

Galloway is most upset by the prospect that the union's withdrawal of support from the petition drive was the result of a deal between OCEA, business leaders and the council majority.

Her signature-gathering effort has sputtered badly over the past month. And though she has yet to acknowledge it, it seems that submitting the required signatures before the deadline for the November ballot — which she said is this week — will not be achieved.

“If that kind of thing [deal-making] happened, I'm just so disillusioned,” Galloway said. “He [Berardino] said he was going to be a warrior with me. … He left me in the bunker alone.”

Berardino said Galloway is misreading the situation. From the beginning, the agreement with her was that OCEA would fund the initiative up to a certain point but that the other backers would have to take over fundraising, Berardino said.

“When the initiative was discussed I informed everybody that the community would have to take over the initiative process, because OCEA as a public employees union would not be credible to the community,” Berardino said. “We gold-plated this gathering effort. Lorri made a great effort to raise money but was unable to do so.”

Berardino said Tait also shares responsibility for the failure of the signature-gathering drive. “Tait refused to campaign for the ballot initiative and refused to help raise money. So if anybody was left in the trenches, it was OCEA,” he said.

Galloway says that there was no understanding that she would have to independently raise funds. “Don't you think I would have known that?” she said.

Regardless of how the labor contract came together, there is a sense in Anaheim of a missed opportunity. In April it seemed that residents had a chance at exerting a larger measure of control over how things are done at City Hall. Today it seems that chance is slipping away.

“The community just didn't pick up the ball and run with it,” Berardino said. “That's the absolute truth.”